Thread
1. Hello. The FTC today sued Facebook to stop it from buying Within, a virtual reality company that Meta competes with head-to-head.
The lawsuit shows that under the leadership of Lina Khan, the FTC is learning its lessons. A quick thread.
The lawsuit shows that under the leadership of Lina Khan, the FTC is learning its lessons. A quick thread.
2. The quick background: Facebook already dominates virtual reality.
Its Oculus headset made up 75% of all VR headset shipments in Q1 2021. Its dominant headset means its app store is also the main way developers access customers, and vice versa.
This wasn't by accident.
Its Oculus headset made up 75% of all VR headset shipments in Q1 2021. Its dominant headset means its app store is also the main way developers access customers, and vice versa.
This wasn't by accident.
3. Zuckerberg's longstanding intention has been to dominate the metaverse; not just the hardware, but also the road going into and out of that industry.
I mean, the company CHANGED ITS WHOLE NAME. Monopolization of VR was and remains Facebook's plan.
I mean, the company CHANGED ITS WHOLE NAME. Monopolization of VR was and remains Facebook's plan.
4. Shocking no one, Facebook has used its documented "copy-acquire-kill" strategy to get here.
It's market-leading headset came from an acquisition (not any kind of innovation, ofc!). It acquired at least 5 other VR companies in the past year alone.
www.vox.com/recode/22933851/meta-facebook-metaverse-antitrust-regulation
It's market-leading headset came from an acquisition (not any kind of innovation, ofc!). It acquired at least 5 other VR companies in the past year alone.
www.vox.com/recode/22933851/meta-facebook-metaverse-antitrust-regulation
5. Every tech has a core use (think Twitch and video games). For VR, its core use has become fitness. Put the headset on and get your workout in in the privacy of your own home.
Facebook owns its own VR apps, but it hasn't quite conquered fitness.
But another developer did.
Facebook owns its own VR apps, but it hasn't quite conquered fitness.
But another developer did.
6. A VR app called Supernatural has become a hit among those who loathe to go to the gym for one reason or another.
www.wired.com/story/supernatural-virtual-reality-exercise-gyms/
The FTC's lawsuit today suggests it's so popular, it's probably the biggest VR fitness app on the market.
www.wired.com/story/supernatural-virtual-reality-exercise-gyms/
The FTC's lawsuit today suggests it's so popular, it's probably the biggest VR fitness app on the market.
7. So earlier this year, Facebook announces its plan to acquire Within, the developer that makes Supernatural.
Facebook wants to own the biggest app for the core use of the technology it has openly planned to monopolize. Ok. Gotcha.
Facebook wants to own the biggest app for the core use of the technology it has openly planned to monopolize. Ok. Gotcha.
8. So the FTC sues. Rather than competing by improving or developing its own VR fitness app, Meta instead acquired Supernatural.
The lawsuit is partially redacted, but the FTC says that acquiring Within "would simply let Meta assume total control of" the market "overnight"
The lawsuit is partially redacted, but the FTC says that acquiring Within "would simply let Meta assume total control of" the market "overnight"
9. Here's the redacted lawsuit: int.nyt.com/data/documenttools/ftc-injunction-request/632c7794cc9ff0a8/full.pdf
It's the first merger lawsuit against a tech co under Lina Khan's leadership. It says, very clearly, "we aren't going to make the same old mistakes again."
It's the first merger lawsuit against a tech co under Lina Khan's leadership. It says, very clearly, "we aren't going to make the same old mistakes again."
10. The facts of the Facebook/Within lawsuit should have felt familiar to the FTC.
Nearly a decade ago, Google proposed buying a traffic navigation app called Waze. At the time, Google owned its own powerful mapping app, AND a major platform for mobile apps - Android.
Nearly a decade ago, Google proposed buying a traffic navigation app called Waze. At the time, Google owned its own powerful mapping app, AND a major platform for mobile apps - Android.
11. It was what one lawyer called the antitrust equivalent of a fastball down the middle of the plate. It was a clear merger-to-near-monopoly, giving Google Maps access to Waze's leading crowdsourced traffic info.
The FTC investigated - and took no action to stop it.
The FTC investigated - and took no action to stop it.
12. We know the story today. Google Maps began integrating Waze's tech into Google Maps, and now it has an absolute monopoly share of the mobile mapping apps market - somewhere near 80%. All because the FTC didn't swing at the fastball.
www.extremetech.com/mobile/300550-google-adds-new-waze-features-to-google-maps
www.extremetech.com/mobile/300550-google-adds-new-waze-features-to-google-maps
13. Then there's Facebook's own purchases of Instagram and Whatsapp - integrating rival apps that Facebook failed at developing itself into the most powerful social media company on Earth.
Again, fastballs that the FTC watched get called for strikes.
Again, fastballs that the FTC watched get called for strikes.
14. Because of those failures and others, the FTC (and DOJ) is now scrambling to play catch-up, spending enormous time and resources on lawsuits to try to unwind deals and stop monopoly abuses.
Lina Khan, in this lawsuit against the Within merger, has said: no more.
Lina Khan, in this lawsuit against the Within merger, has said: no more.
15. What it means for future tech deals - like Amazon's current attempt to buy its way into the healthcare market - I can't know.
But if you're a dominant company in a platform, data, buying or selling, I'd be weary of trying to buy even more power under Khan's watch.
/end.
But if you're a dominant company in a platform, data, buying or selling, I'd be weary of trying to buy even more power under Khan's watch.
/end.
